Edited by Edward N. Wolff
Chapter 5: Has Economic Well-being Improved in Canada and the United States?
5. Has economic well-being improved in Canada and the United States? Lars Osberg and Andrew Sharpe* INTRODUCTION By standard measures of economic well-being, the year 2000 was the best yet in North America. Inﬂation and unemployment were both down, while gross domestic product (GDP) per capita was up. Although Canadians were a bit unhappy because growth was much stronger in the United States than in Canada in the early 1990s, the 30 years from 1970 to 2000 saw substantial growth in GDP in both countries. Admittedly, both the US and Canadian economies experienced sharp recessions in the early 1980s, but over the entire period between 1970 and 1990, they both grew by about the same amount (per capita real GDP was up 56.6 per cent in Canada and 53.8 per cent in the United States). In the early 1990s, both countries went into recession, but a growth-oriented monetary policy in the United States produced rapid recovery and enabled GDP per capita to grow by a further 24.8 per cent from 1990 to 2000. Because the Bank of Canada was willing to sacriﬁce growth for inﬂation aversion, it took until 1995 for Canadian GDP per capita to recover to its level of 1989 – by which time US GDP was 7.6 per cent above its 1989 level. Since then Canadian growth in per capita GDP has been comparable to US growth, but much of the early 1990s gap remained. Still, in both countries GDP per capita was, in the...
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